The 29-year-old, who played Rob Grayson in the BBC soap, was held on suspicion of growing and supplying cannabis after police attended his home in Bacup, Lancashire, during the early hours of Saturday morning.
Latham best known for his role as Phillip "Lip" Gallagher in Shameless, was also questioned in connection with an assault and possession of an offensive weapon, Lancashire Police said. He was later released on bail pending further inquiries.
A spokeswoman said: "We can confirm a 29-year-old man was arrested at an address in Bacup on suspicion of the production and supply of a class-B drug. He was also questioned in connection with a Section 39 assault and possession of an offensive weapon. He has been bailed pending further inquiries."
She added that no-one was seriously injured in the incident.
Latham played the intelligent and outspoken eldest son of Frank Gallagher in Channel 4's acclaimed drama Shameless between 2004 and 2008. He appeared as pimp Grayson in EastEnders between February and March this year.